AUSSIE BONDS: Smooth Digestion Of Mar-36 Supply With Stronger Demand
The latest ACGB Mar-36 auction saw adequate demand, with the weighted average yield coming in 0.41bps through prevailing mid-yields, according to Yieldbroker, continuing the trend of firm pricing at recent ACGB auctions.
- However, the cover ratio rebounded to a solid 4.45x from 2.5792x.
- As highlighted in our preview, bidding at today’s auction faced an outright yield that was 10-15bps higher than the previous auction level and about 10bps below the late February peak.
- However, the 3/10 yield curve was slightly flatter than the previous auction level and sits around 20bps flatter than its recent high.
- Global sentiment toward bonds has also deteriorated recently, providing a less than favourable backdrop for today’s issuance.
- Early post-auction trading of both XM futures and the bond line is modestly richer.
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CNH: USD/CNY Fixing Edges Up, Fixing Error Back To Negative
The USD/CNY fixing printed at 7.1789, versus a Bloomberg market consensus of 7.1849.
- Today's fixing edges up from Friday's outcome (7.1772), while the fixing error flips back to a negative of -60pips. This is in line with higher USD index levels over recent trading.
- USD/CNH is little changed in the first part of trade, with the pair last near 7.1890.
CHINA SETS YUAN CENTRAL PARITY AT 7.1789 MON VS 7.1772
- CHINA SETS YUAN CENTRAL PARITY AT 7.1789 MON VS 7.1772
NEW ZEALAND: Slower Growth Expected But Inflation Eases To Band Mid-Point
The NZIER June survey of forecasters has been published and is showing a downward revision to NZ growth this financial year and next compared with the March results. FY25 is down 0.3pp to 1.1% and FY26 0.2pp to 1.9%, the recovery remains in place supported by lower rates. Residential investment is the main driver of the projection changes with the NZIER citing “reduced pipeline of housing construction”. However, inflation was revised up 0.2pp to 2.5% for FY25 but FY26 was unchanged at 2.2% and it holds around the RBNZ’s 2.0% band mid-point thereafter.
- Despite expectations for slower growth the unemployment rate was revised down 0.1pp to 5.1% in FY25 & FY26 but employment growth is weaker in FY25 down 0.3pp to -0.7% but FY26 remains at 1.4%.
- Forecasters revised up near-term export expectations due to increased demand for food stuffs. However, the current highly uncertain global growth environment and increased trade protectionism drove a downward revision in FY27 with FY28 unchanged.
- See NZIER “Consensus Forecasts” here.
